Fed’s Bullard Says He Expects Growth to Pick Up in Second Half

July 29 (Bloomberg) -- Federal Reserve Bank of St. Louis
President James Bullard said he expects U.S. economic growth to
pick up in the second half of the year, after a report showing
the economy expanded less than forecast in the second quarter.

“This is all confirming what we already knew, which is
that the first half has not been as strong as we’d like,”
Bullard said of today’s Commerce Department report in an
interview with CNBC Television.

The U.S. economy grew less than forecast in the second
quarter after almost stalling at the start of the year, Commerce
Department figures showed today. Gross domestic product rose at
a 1.3 percent annual rate following a 0.4 percent gain in the
prior quarter that was less than previously estimated.

Bullard said issues that plagued the economy in the first
half of the year, such as the March earthquake in Japan, high
oil prices and the European debt crisis, have largely subsided.
One uncertainty that remains is whether lawmakers will reach a
deal to cut the nation’s budget deficit in time to raise the
debt-ceiling by Aug. 2.

“We’ll get a deal and then we’ll have those uncertainties
off the table,” Bullard said in the interview. “We’re in
better shape for better growth in the second half of the year.”

Bullard said that while central bankers need to react to
economic data and make policy adjustments accordingly, the Fed
is already pursuing an “ultra-easy monetary policy.”

“We’ve got interest rates at zero, they’ve been at zero
for a long time, we’ve got the extended period language and
we’ve got an enlarged balance sheet, which we ratcheted up with
QE2,” he said.

‘Extended Period’

The Federal Open Market Committee voted on June 22 to
conclude its $600 billion bond-buying program as scheduled at
the end of last month, and to maintain its balance sheet near
record levels by reinvesting proceeds from its securities
holdings. Central bankers also pledged to leave interest rates
low for an “extended period.”

“We still have a very easy policy, it’s threatening higher
inflation in the U.S. economy,” Bullard said. “We have to be
cognizant of that moving forward.”

Bullard, 50, has led the St. Louis Fed since 2008. Fed
presidents rotate voting on monetary policy with Bullard next
voting in 2013.